Simply Good Foods Company

04/09/2026 | Press release | Distributed by Public on 04/09/2026 06:26

Quarterly Report for Quarter Ending 2/28/2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q (this "Report") contains forward-looking statements. When used anywhere in this Report, the words "expect," "believe," "anticipate," "estimate," "intend," "plan" and similar expressions are intended to identify forward-looking statements. These statements relate to future events or our future financial or operational performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. These statements include, but are not limited to, our expectations regarding our supply chain, including but not limited to, raw materials and logistics costs, the effect of price increases, inflationary pressure on us and our contract manufacturers, changes in taxes, tariffs, duties, governmental laws and regulations, our growth, our competitive position, and the unforeseen business disruptions or other effects due to current global geopolitical tension. We disclaim any undertaking to publicly update or revise any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, except as required by applicable law. These statements reflect our current views with respect to future events and are based on assumptions subject to risks and uncertainties. Such risks and uncertainties include those related to our ability to sell our products.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended August 30, 2025, ("Annual Report") and our unaudited consolidated financial statements and the related notes appearing elsewhere in this Report. In addition to historical information, the following discussion contains forward-looking statements, including, but not limited to, statements regarding the Company's expectation for future performance, liquidity and capital resources that involve risks, uncertainties and assumptions that could cause actual results to differ materially from the Company's expectations. The Company's actual results may differ materially from those contained in or implied by any forward-looking statements. Factors that could cause such differences include those identified in Item 1A. "Risk Factors" of our Annual Report and this Report. The Company assumes no obligation to update any of these forward-looking statements.
Unless the context requires otherwise in this Report, the terms "we," "us," "our," the "Company" and "Simply Good Foods" refer to The Simply Good Foods Company and its subsidiaries. In context, "Quest" may also refer to the Quest brand, "Atkins" may also refer to the Atkins brand, and "OWYN" may also refer to the OWYN brand. Atkins, Quest, OWYN, and the Simply Good logo are either registered trademarks or trademarks of the Company's wholly owned subsidiary Simply Good Foods USA, Inc. or one of its affiliates in the United States and elsewhere. All rights are reserved.
Overview
The Simply Good Foods Company, headquartered in Denver, Colorado, is a consumer packaged food and beverage company with ambitious goals to raise the bar on what food can be with trusted brands and innovative nutritious snacking products. Within our portfolio of trusted brands (Quest, Atkins, and OWYN), we offer a wide variety of nutritional snacks and beverages, including high protein chips, bars, ready-to-drink (RTD) shakes, and powders, and low sugar, low carb sweets and baked goods. We are a leader of the nutritious snacking movement, poised to expand our healthy lifestyle platform through innovation-driven organic growth and external investment opportunities.
Our nutritious snacking platform consists of brands that specialize in providing products for consumers that follow certain nutritional philosophies and health-and-wellness trends: Quest for consumers seeking a variety of protein-rich foods and beverages that also limit sugars and simple carbohydrates, Atkins for those following a low-carbohydrate lifestyle or seeking to manage weight or blood sugar levels, and OWYN for consumers seeking protein-rich beverages that are plant-based and tested for the top nine allergens that also limit sugars and simple carbohydrates. We distribute our products in major retail channels, primarily in North America, including grocery, club, and mass merchandise, and through e-commerce, convenience, specialty, and other channels. Our portfolio of nutritious snacking brands gives us a strong platform with which to introduce new products, expand distribution, and attract new consumers to our products.
The Simply Good Foods Company ("Simply Good Foods") was formed in March 2017 to acquire NCP-ATK Holdings, Inc. ("Atkins"), which was completed in July 2017. As part of Simply Good Foods' strategy to become an industry-leading snacking platform, we acquired Quest Nutrition, LLC ("Quest") in November 2019 and we acquired Only What You Need, Inc. in June 2024. We refer to the acquisition of Quest Nutrition, LLC as the "Quest Acquisition" and the acquisition of Only What You Need, Inc. as the "OWYN Acquisition".
Business Trends
During the twenty-six weeks ended February 28, 2026, our results of operations were primarily driven by continued distribution-related declines for Atkins and recent velocity-related declines for OWYN, which were partially offset by Quest volume-driven growth. In recent periods, retail distribution for the Atkins brand has been under pressure. The Atkins brand has had, and continues to have, a large retail presence on-shelf, which is being reduced in the current fiscal year and could be reduced in future periods. In response, during the current fiscal year, we are taking actions to bolster the highest performing Atkins products and simultaneously working with retailers to replace lower performing Atkins products with higher performing products. In the second quarter of fiscal year 2026, OWYN experienced poor velocities, including on newly expanded distribution, which will result in distribution-related declines in the current fiscal year and could continue to be reduced in future periods. In response, the Company is taking actions to increase consumer demand to restore velocities and growth for the brand.
The Company's gross margin was affected by the unfavorable effects of higher commodity expenses and tariffs compared to the prior
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year, with productivity a modest offset in the quarter. Margins are expected to remain under pressure until the Company realizes the benefits expected from recently implemented pricing actions, productivity initiatives and other mitigating actions, which are expected to build as the fiscal year progresses. We continue to monitor macroeconomic trends and uncertainties such as consumer and economic uncertainty, key ingredient inflation, supply chain challenges, and the effects of tariffs, which may have adverse effects on net sales and profitability. We are continuing to evaluate these factors and our ability to potentially offset all or a portion of cost increases through pricing actions and cost savings efforts. Economic pressures on customers and consumers, including the challenges of high inflation and the effects of tariffs, may negatively affect our net sales and profitability in the future.
The ongoing conflict in Iran and geopolitical tensions in the region could lead to significant disruption of global energy supplies and increases in global energy prices, adversely affect global supply chains, heighten inflationary pressures on our input costs and supply chain, and adversely affect consumer spending patterns. We are continuing to evaluate the evolving macroeconomic environment, however at this time we do not expect these factors to result in a material negative effect on our business, financial condition and results of operations.
Intangible Assets
As a result of the declines of net sales and future revenue projections assessed during the second quarter of fiscal year 2026, the Company identified a triggering event indicating that it was more likely than not that the fair value of both the OWYN and Atkins brands and trademarks indefinite-lived intangible assets were less than their respective carrying amounts. The Company conducted a quantitative assessment as of the last day of its second quarter, February 28, 2026, utilizing an income approach to estimate the fair value of the intangible assets. Based on testing, the respective assets carrying values exceeded their fair values, resulting in a loss on impairment of $187.0 million for OWYN and $62.0 million for Atkins during the thirteen weeks ended February 28, 2026. There were no impairment charges related to the Company's indefinite-lived intangible assets during the twenty-six weeks ended March 1, 2025.
We believe the estimates and assumptions utilized in our impairment assessments are reasonable and are comparable to those that would be used by other marketplace participants. However, actual events and results could differ substantially from those utilized in our initial valuations. Significant declines of future revenue projections or changes of other assumptions used in estimating fair values versus those utilized at the time of the initial valuations could result in impairment charges that could materially affect the consolidated financial statements. Refer to Note 4, Goodwill and Intangibles, of our Notes to Unaudited Consolidated Financial Statements in this Report for additional information regarding the Company's impairment assessments.
Restructuring and Other
For the twenty-six weeks ended February 28, 2026, the Company incurred $4.5 million of costs for restructuring activities which have been included within General and administrativeon the Consolidated Statements of Operations and Comprehensive Income (Loss). As of February 28, 2026, the outstanding restructuring liability was $1.1 million. Refer to Note 14, Restructuring and Other, of our Notes to Unaudited Consolidated Financial Statements in this Report for additional information regarding restructuring and other activities.
The Company has also announced certain future restructuring activities in conjunction with the implementation of the Company's modified organization design and actions to streamline its operations, which will create a more efficient organization that will continue to support and build its business. These restructuring plans primarily include workforce reductions, changes in management structure, actions to streamline its operations and other cost savings initiatives. While early in the process, the Company expects to incur approximately $15.0 million, including the $4.5 million referenced above, in restructuring and other costs, which are to be paid throughout fiscal 2026 and fiscal 2027.
In connection with the restructuring activities, the Company recorded incremental stock-based compensation expense of $1.0 million in connection with the separation of the Company's prior President and Chief Executive Officer in January 2026. Refer to Note 12, Omnibus Incentive Plan, of our Notes to Unaudited Consolidated Financial Statements in this Report for additional information.
Key Financial Definitions
Net sales.Net sales consist primarily of product sales less the cost of promotional activities, slotting fees and other sales credits and adjustments, including product returns.
Cost of goods sold.Cost of goods sold consists primarily of the costs we pay to our contract manufacturing partners to produce the products sold. These costs include the purchase of raw ingredients, packaging, shipping and handling, warehousing, depreciation of warehouse equipment, and a tolling charge for the contract manufacturer. Cost of goods sold includes products provided at no charge as part of promotions and the non-food materials provided with customer orders.
Operating expenses.Operating expenses consist primarily of selling and marketing, general and administrative, depreciation and amortization, and business transaction costs. The following is a brief description of the components of operating expenses:
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•Selling and marketing.Selling and marketing expenses are comprised of broker commissions, customer marketing, media and other marketing costs.
•General and administrative.General and administrative expenses are comprised of expenses associated with corporate and administrative functions that support our business, including employee compensation, stock-based compensation, professional services, integration expense, restructuring costs, insurance and other general corporate expenses.
•Depreciation and amortization.Depreciation and amortization expenses consist of expenses associated with the depreciation of fixed assets and capitalized leasehold improvements and amortization of intangible assets.
•Business Transaction Costs.Business transaction costs are comprised of transaction advisory fees, non-deferrable debt issuance costs, legal, due diligence, consulting, and accounting expenses associated with the OWYN Acquisition.
•Loss on impairment. Loss on impairment is comprised of impairment charges related to our brands and trademarks indefinite-lived intangible asset.
Results of Operations
During the thirteen weeks ended February 28, 2026, our net sales decreased 9.4% to $326.0 million compared to $359.7 million for the thirteen weeks ended March 1, 2025, driven by distribution-related declines for Atkins and velocity-related declines for OWYN.
Gross profit decreased and gross profit margin decreased 460 basis points, primarily as a result of unfavorable commodity expenses and tariffs compared to the prior period. We expect to continue building on our existing capabilities and strengthening the position of our brands in the marketplace, and will continue to invest in our business and improve our operating efficiencies.
In assessing the performance of our business, we consider a number of key performance indicators used by management and typically used by our competitors, including the non-GAAP measures EBITDA and Adjusted EBITDA. Because not all companies use identical calculations, this presentation of EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. See "Reconciliation of EBITDA and Adjusted EBITDA" below for a reconciliation of EBITDA and Adjusted EBITDA to net income for each applicable period.
Comparison of Unaudited Results for the Thirteen Weeks Ended February 28, 2026, and the Thirteen Weeks Ended March 1, 2025
The following unaudited table presents, for the periods indicated, selected information from our Consolidated Statements of Operations and Comprehensive Income (Loss), including information presented as a percentage of net sales:
Thirteen Weeks Ended Thirteen Weeks Ended
(In thousands) February 28, 2026 % of Net Sales March 1, 2025 % of Net Sales
Net sales $ 326,013 100.0 % $ 359,655 100.0 %
Cost of goods sold 222,980 68.4 % 229,518 63.8 %
Gross profit 103,033 31.6 % 130,137 36.2 %
Operating expenses:
Selling and marketing 28,167 8.6 % 35,078 9.8 %
General and administrative 34,875 10.7 % 36,013 10.0 %
Depreciation and amortization 4,309 1.3 % 4,148 1.2 %
Business transaction costs - - % 177 - %
Loss on impairment 249,000 76.4 % - - %
Total operating expenses 316,351 97.0 % 75,416 21.0 %
(Loss) income from operations (213,318) (65.4) % 54,721 15.2 %
Other income (expense):
Interest income 880 0.3 % 701 0.2 %
Interest expense (5,833) (1.8) % (6,338) (1.8) %
Gain (loss) on foreign currency transactions 190 0.1 % (125) - %
Other income 60 - % 19 - %
Total other (expense) (4,703) (1.4) % (5,743) (1.6) %
(Loss) income before income taxes (218,021) (66.9) % 48,978 13.6 %
Income tax (benefit) expense (58,323) (17.9) % 12,231 3.4 %
Net (loss) income $ (159,698) (49.0) % $ 36,747 10.2 %
Other financial data:
Adjusted EBITDA (1)
$ 55,510 17.0 % $ 68,001 18.9 %
(1) Adjusted EBITDA is a non-GAAP financial metric. See "Reconciliation of EBITDA and Adjusted EBITDA" below for a reconciliation of net income to EBITDA and Adjusted EBITDA for each applicable period.
Net sales. Net sales were $326.0 million for the thirteen weeks ended February 28, 2026, compared to $359.7 million for the thirteen weeks ended March 1, 2025, representing a decrease of $33.6 million, or 9.4%, driven by distribution-related declines for Atkins and velocity-related declines for OWYN.
Cost of goods sold. Cost of goods sold decreased $6.5 million, or 2.8%, for the thirteen weeks ended February 28, 2026, compared to the thirteen weeks ended March 1, 2025. The cost of goods sold decrease was driven primarily by the decrease of net sales compared to the prior year period.
Gross profit. Gross profit decreased $27.1 million, or 20.8%, to $103.0 million for the thirteen weeks ended February 28, 2026, compared to the thirteen weeks ended March 1, 2025. Gross profit margin was 31.6% of net sales for the thirteen weeks ended February 28, 2026, a decrease of 460 basis points from 36.2% of net sales for the thirteen weeks ended March 1, 2025. The decrease in gross profit margin was primarily driven by unfavorable commodity expenses compared to the prior year period.
Operating expenses. Operating expenses increased $240.9 million, or 319.5%, for the thirteen weeks ended February 28, 2026, compared to the thirteen weeks ended March 1, 2025, due to the following:
•Selling and marketing. Selling and marketing expenses decreased $6.9 million, or 19.7%, for the thirteen weeks ended February 28, 2026, compared to the thirteen weeks ended March 1, 2025. The decrease was primarily related to a planned decrease in Atkins marketing spend partially offset by increases for Quest.
•General and administrative. General and administrative expenses decreased $1.1 million, or 3.2%, for the thirteen weeks ended February 28, 2026, compared to the thirteen weeks ended March 1, 2025. The decrease was primarily attributable to a decrease of $3.8 million in employee-related costs, a decrease of $1.2 million in integration expenses related to the OWYN Acquisition, and a decrease of $0.5 million in term loan transaction fees, partially offset by an increase of $4.5 million in restructuring costs primarily related to the separation of the Company's prior President and Chief Executive Officer.
•Depreciation and amortization. Depreciation and amortization expense was $4.3 million for the thirteen weeks ended February 28, 2026, and $4.1 million for the thirteen weeks ended March 1, 2025, respectively.
•Business transaction costs. Business transaction costs were zero for the thirteen weeks ended February 28, 2026, compared to $0.2 million for the thirteen weeks ended March 1, 2025, and were comprised of expenses related to the OWYN Acquisition.
•Loss on impairment. Loss on impairment charges were $249.0 million for the thirteen weeks ended February 28, 2026 and zero for the thirteen weeks ended March 1, 2025. Refer to Note 4, Goodwill and Intangibles, for additional information regarding the Company's impairment assessments.
Interest income. Interest income of $0.9 million increased $0.2 million for the thirteen weeks ended February 28, 2026, compared to the thirteen weeks ended March 1, 2025.
Interest expense. Interest expense of $5.8 million decreased $0.5 million for the thirteen weeks ended February 28, 2026, compared to the thirteen weeks ended March 1, 2025, primarily due to the decrease in interest rates on our Term Facility to 5.7% as of February 28, 2026 from 6.3% as of March 1, 2025.
Gain (loss) on foreign currency transactions. Foreign currency transactions resulted in a $0.2 million gain for the thirteen weeks ended February 28, 2026, and a $0.1 million loss for the thirteen weeks ended March 1, 2025.
Income tax (benefit) expense. Income tax benefit was $58.3 million for the thirteen weeks ended February 28, 2026, compared to income tax expense of $12.2 million during the thirteen weeks ended March 1, 2025. The change in our income tax (benefit) expense was primarily driven by lower income from operations, primarily the loss on impairment.
Net (loss) income. Net loss was $159.7 million for the thirteen weeks ended February 28, 2026, a decrease of $196.4 million, compared to net income of $36.7 million for the thirteen weeks ended March 1, 2025. Net loss was primarily driven by higher operating expenses, primarily the loss on impairment, and was partially offset by lower income tax (benefit) expense and other expense.
Adjusted EBITDA. Adjusted EBITDA decreased $12.5 million, or 18.4%, for the thirteen weeks ended February 28, 2026, compared to the thirteen weeks ended March 1, 2025, driven primarily by lower gross profit. For a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, see "Reconciliation of EBITDA and Adjusted EBITDA" below.
Comparison of Unaudited Results for the Twenty-Six Weeks Ended February 28, 2026, and the Twenty-Six Weeks Ended March 1, 2025
The following unaudited table presents, for the periods indicated, selected information from our Consolidated Statements of Operations and Comprehensive Income (Loss), including information presented as a percentage of net sales:
Twenty-Six Weeks Ended Twenty-Six Weeks Ended
(In thousands) February 28, 2026 % of Net Sales March 1, 2025 % of Net Sales
Net sales $ 666,211 100.0 % $ 700,923 100.0 %
Cost of goods sold 453,278 68.0 % 440,300 62.8 %
Gross profit 212,933 32.0 % 260,623 37.2 %
Operating expenses:
Selling and marketing 57,844 8.7 % 68,072 9.7 %
General and administrative 72,881 10.9 % 74,077 10.6 %
Depreciation and amortization 8,942 1.3 % 8,308 1.2 %
Business transaction costs - - % 820 0.1 %
Loss on impairment 249,000 37.4 % - - %
Total operating expenses 388,667 58.3 % 151,277 21.6 %
(Loss) income from operations (175,734) (26.4) % 109,346 15.6 %
Other income (expense):
Interest income 1,379 0.2 % 1,477 0.2 %
Interest expense (10,119) (1.5) % (14,199) (2.0) %
Gain (loss) on foreign currency transactions 133 - % (5) - %
Other income 136 - % 34 - %
Total other (expense) (8,471) (1.3) % (12,693) (1.8) %
Income before income taxes (184,205) (27.6) % 96,653 13.8 %
Income tax (benefit) expense (49,776) (7.5) % 21,784 3.1 %
Net (loss) income $ (134,429) (20.2) % $ 74,869 10.7 %
Other financial data:
Adjusted EBITDA (1)
$ 111,134 16.7 % $ 138,069 19.7 %
(1) Adjusted EBITDA is a non-GAAP financial metric. See "Reconciliation of EBITDA and Adjusted EBITDA" below for a reconciliation of net income to EBITDA and Adjusted EBITDA for each applicable period.
Net sales. Net sales were $666.2 million for the twenty-six weeks ended February 28, 2026, compared to $700.9 million for the twenty-six weeks ended March 1, 2025, representing a decrease of $34.7 million, or 5.0%, driven by the distribution-related declines for Atkins and velocity-related declines for OWYN, which were partially offset by Quest volume-driven growth.
Cost of goods sold. Cost of goods sold increased $13.0 million, or 2.9%, for the twenty-six weeks ended February 28, 2026, compared to the twenty-six weeks ended March 1, 2025. The cost of goods sold increase was driven primarily by higher ingredient and packaging costs compared to the prior year period.
Gross profit. Gross profit decreased $47.7 million, or 18.3%, to $212.9 million for the twenty-six weeks ended February 28, 2026, compared to the twenty-six weeks ended March 1, 2025. Gross profit margin was 32.0% of net sales for the twenty-six weeks ended February 28, 2026, a decline of 520 basis points from 37.2% of net sales for the twenty-six weeks ended March 1, 2025. The decline in gross profit margin was primarily driven by unfavorable commodity expenses compared to the prior year period.
Operating expenses. Operating expenses increased $237.4 million, or 156.9%, for the twenty-six weeks ended February 28, 2026, compared to the twenty-six weeks ended March 1, 2025, due to the following:
•Selling and marketing. Selling and marketing expenses decreased $10.2 million, or 15.0%, for the twenty-six weeks ended February 28, 2026, compared to the twenty-six weeks ended March 1, 2025 The decrease was primarily related to a planned decrease in Atkins marketing spend partially offset by increases for Quest.
•General and administrative. General and administrative expenses decreased $1.2 million, or 1.6%, for the twenty-six weeks ended February 28, 2026, compared to the twenty-six weeks ended March 1, 2025. The decrease was primarily attributable to a decrease of $3.6 million in employee-related costs, a decrease of $2.8 million in integration expenses related to the OWYN Acquisition, and lower general corporate expenses, partially offset by an increase of $4.5 million in restructuring costs primarily related to the separation of the Company's prior President and Chief Executive Officer, and an increase of $2.3 million in term loan transaction fees.
•Depreciation and amortization. Depreciation and amortization expense was $8.9 million and $8.3 million for the twenty-six weeks ended February 28, 2026, compared to the twenty-six weeks ended March 1, 2025, respectively.
•Business transaction costs. Business transaction costs were zero for the twenty-six weeks ended February 28, 2026, compared to $0.8 million for the twenty-six weeks ended March 1, 2025, and were comprised of expenses related to the OWYN Acquisition.
•Loss on impairment.Loss on impairment charges were $249.0 million for the twenty-six weeks ended February 28, 2026 and zero for the twenty-six weeks ended March 1, 2025. Refer to Note 4, Goodwill and Intangibles, for additional information regarding the Company's impairment assessments.
Interest income. Interest income of $1.4 million decreased $0.1 million for the twenty-six weeks ended February 28, 2026, compared to the twenty-six weeks ended March 1, 2025.
Interest expense. Interest expense of $10.1 million decreased $4.1 million for the twenty-six weeks ended February 28, 2026, compared to the twenty-six weeks ended March 1, 2025, primarily due to the decrease in interest rates on our Term Facility to 5.7% as of February 28, 2026 from 6.3% as of March 1, 2025.
Gain (loss) on foreign currency transactions. Foreign currency transactions resulted in a $0.1 million gain and an immaterial loss for the twenty-six weeks ended February 28, 2026, and March 1, 2025, respectively.
Income tax (benefit) expense. Income tax benefit was $49.8 million for the twenty-six weeks ended February 28, 2026, compared to income tax expense of $21.8 million during the twenty-six weeks ended March 1, 2025. The change in our income tax (benefit) expense was primarily driven by lower income from operations, primarily the loss on impairment.
Net (loss) income.Net loss was $134.4 million for the twenty-six weeks ended February 28, 2026, a decrease of $209.3 million compared to net income of $74.9 million for the twenty-six weeks ended March 1, 2025. Net loss was primarily driven by higher operating expenses, primarily the loss on impairment, and was partially offset by lower income tax (benefit) expense and other expense.
Adjusted EBITDA. Adjusted EBITDA decreased $26.9 million, or 19.5% for the twenty-six weeks ended February 28, 2026, compared to the twenty-six weeks ended March 1, 2025, driven primarily by lower gross profit. For a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, see "Reconciliation of EBITDA and Adjusted EBITDA" below.
Reconciliation of EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are non-GAAP financial measures commonly used in our industry and should not be construed as alternatives to net income as an indicator of operating performance or as alternatives to cash flow provided by operating activities as a measure of liquidity (each as determined in accordance with GAAP). The Company defines EBITDA as net income or loss before interest income, interest expense, income tax (benefit) expense, depreciation and amortization, and Adjusted EBITDA as further adjusted to exclude the following items: loss on impairment, stock-based compensation expense, business transaction costs, purchase price accounting inventory step-up, integration expenses, term loan transaction fees, restructuring, and other non-core expenses. The Company believes that EBITDA and Adjusted EBITDA, when used in conjunction with net income, are useful to provide additional information to investors. Management of the Company uses EBITDA and Adjusted EBITDA to supplement net income because these measures reflect operating results of the on-going operations, eliminate items that are not directly attributable to the Company's underlying operating performance, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to the key metrics the Company's management uses in its financial and operational decision making. The Company also believes that EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industry. EBITDA and Adjusted EBITDA may not be comparable to other similarly titled captions of other companies due to differences in the non-GAAP calculation.
The following unaudited table provides a reconciliation of EBITDA and Adjusted EBITDA to its most directly comparable GAAP measure, which is net income, for the thirteen and twenty-six weeks ended February 28, 2026, and March 1, 2025:
(In thousands) Thirteen Weeks Ended Twenty-Six Weeks Ended
February 28, 2026 March 1, 2025 February 28, 2026 March 1, 2025
Net (loss) income $ (159,698) $ 36,747 $ (134,429) $ 74,869
Interest income (880) (701) (1,379) (1,477)
Interest expense 5,833 6,338 10,119 14,199
Income tax (benefit) expense (58,323) 12,231 (49,776) 21,784
Depreciation and amortization 5,864 5,088 12,069 10,135
EBITDA (207,204) 59,703 (163,396) 119,510
Loss on impairment 249,000 - 249,000 -
Stock-based compensation expense 4,544 4,948 7,627 8,792
Business transaction costs - 177 - 820
Inventory step-up - 438 - 1,412
Integration expense(1)
4,703 1,955 10,621 6,886
Term loan transaction fees 202 715 3,030 715
Restructuring and other costs 4,524 - 4,524 -
Other (2)
(259) 65 (272) (66)
Adjusted EBITDA $ 55,510 $ 68,001 $ 111,134 $ 138,069
(1)Includes one-time effects from actions taken to mitigate OWYN product quality issues.
(2) Other items consist principally of exchange impact of foreign currency transactions and other expenses.
Liquidity and Capital Resources
Overview
We have historically funded our operations with cash flow from operations and, when needed, with borrowings under our Credit Agreement (as defined below). Our principal uses of cash have been working capital, debt service, repurchases of our common stock, and acquisition opportunities.
We had $107.4 million in cash as of February 28, 2026. We believe our sources of liquidity and capital will be sufficient to finance our continued operations, growth strategy and additional expenses we expect to incur for at least the next twelve months. As circumstances warrant, we may issue debt and/or equity securities from time to time on an opportunistic basis, dependent upon market conditions and available pricing. We make no assurance that we can issue and sell such securities on acceptable terms or at all.
Our material future cash requirements from contractual and other obligations relate primarily to our principal and interest payments for our Term Facility, as defined and discussed below, and our operating leases. Refer to Note 5, Long-Term Debt and Line of Credit, and Note 8, Leases, of the Notes to Unaudited Consolidated Financial Statements in this Report for additional information related to the expected timing and amount of payments related to our contractual and other obligations.
Debt and Credit Facilities
On July 7, 2017, the Company (through certain of its subsidiaries) entered into a credit agreement with Barclays Bank PLC and other parties (as amended to date, the "Credit Agreement"). The Credit Agreement at that time provided for (i) a term facility of $200.0 million ("Term Facility") with a seven-year maturity and (ii) a revolving credit facility of up to $75.0 million (the "Revolving Credit Facility") with a five-year maturity. Substantially concurrent with the consummation of the business combination which formed the Company between Conyers Park Acquisition Corp. and NCP-ATK Holdings, Inc. on July 7, 2017, the full $200.0 million of the Term Facility (the "Term Loan") was drawn.
On November 7, 2019, we entered into a second amendment (the "Incremental Facility Amendment") to the Credit Agreement to increase the principal borrowed on the Term Facility by $460.0 million. The Term Facility together with the incremental borrowing make up the Initial Term Loans (as defined in the Incremental Facility Amendment). The Incremental Facility Amendment was executed to partially finance the acquisition of Quest Nutrition, LLC on November 7, 2019. No amounts under the Term Facility were repaid as a result of the execution of the Incremental Facility Amendment.
Effective as of December 16, 2021, we entered into a third amendment (the "Extension Amendment") to the Credit Agreement. The Extension Amendment provided for an extension of the stated maturity date of the Revolving Commitments and Revolving Loans (each as defined in the Credit Agreement) from July 7, 2022, to the earlier of (i) 91 days prior to the then-effective maturity date of the Initial Term Loans and (ii) December 16, 2026.
On January 21, 2022, we entered into the "2022 Repricing Amendment" to the Credit Agreement. The 2022 Repricing Amendment, among other things, (i) reduced the interest rate per annum applicable to the Initial Term Loans outstanding under the Credit Agreement immediately prior to the effective date of the 2022 Repricing Amendment, (ii) reset the prepayment premium for the existing Initial Term Loans to apply to Repricing Transactions (as defined in the Credit Agreement) that occur within six months after the effective date of the 2022 Repricing Amendment, and (iii) implemented SOFR and related replacement provisions for LIBOR.
On April 25, 2023, the Company entered into the "2023 Repricing Amendment" to the Credit Agreement. The 2023 Repricing Amendment, (i) reduced the interest rate per annum applicable to the Initial Term Loans outstanding under the Credit Agreement immediately prior to April 25, 2023, and (ii) provided for an extension of the maturity date of the Initial Term Loans from July 7, 2024, to March 17, 2027.
On June 13, 2024, the Company entered into a sixth amendment (the "2024 Incremental Facility Amendment") to the Credit Agreement to increase the principal borrowed on the Term Facility by $250.0 million. The terms of the incremental borrowing are the same as the terms of the outstanding borrowings under the Term Facility. The 2024 Incremental Facility Amendment was executed to partially finance the OWYN Acquisition. No amounts under the Term Facility were repaid as a result of the execution of the 2024 Incremental Facility Amendment.
On January 31, 2025, the Company entered into a seventh amendment (the "2025 Repricing Amendment") to the Credit Agreement to reduce the interest rate per annum applicable to the Initial Term Loans outstanding under the Credit Agreement immediately prior to the effective date of the 2025 Repricing Amendment.
On November 19, 2025, the Company entered into an eighth amendment (the "2026 Incremental Facility Amendment") to the Credit Agreement to increase the principal borrowed on the Term Facility by $150.0 million and provided for an extension of the maturity date from March 17, 2027 to March 17, 2030. The 2026 Incremental Facility Amendment also provided for an extension of the stated maturity date of the
Revolving Commitments and Revolving Loans (each as defined in the Credit Agreement) from December 16, 2026, to the earlier of (i) 91 days prior to the then-effective maturity date of the Term Facility and (ii) December 16, 2029. The terms of the incremental borrowing are substantially the same as the terms of the outstanding borrowings under the Term Facility. No amounts of the Term Facility were repaid as a result of the execution of the 2026 Incremental Facility Amendment.
Effective as of the 2026 Incremental Facility Amendment, the interest rate per annum for the Initial Term Loans is based on either:
i.A base rate equaling the higher of (a) the "prime rate," (b) the federal funds effective rate plus 0.50%, or (c) the Adjusted Term SOFR Rate (as defined in the Credit Agreement) applicable for an interest period of one month plus 1.00% plus (x) 1.00% margin for the Term Loan or (y) 1.00% margin for the Revolving Credit Facility; or
ii.SOFR, subject to a floor of 0.00%, plus (x) 2.00% margin for the Term Loan or (y) 2.00% margin for the Revolving Credit Facility.
In connection with the closing of the 2026 Incremental Facility Amendment, the Company expensed $2.7 million of non-deferrable third-party costs through General and administrative within the Consolidated Statements of Operations and Comprehensive Income (Loss) and capitalized $2.6 million of upfront lender fees (original issue discount) and third-party financing costs.
The Simply Good Foods Company is not a borrower under the Credit Agreement and has not provided a guarantee of the Credit Agreement. Simply Good Foods USA, Inc., is the administrative borrower and certain other subsidiary holding companies are co-borrowers under the Credit Agreement. Each of our domestic subsidiaries that is not a named borrower under the Credit Agreement has provided a guarantee on a secured basis. As security for the payment or performance of the debt under the Credit Agreement, the borrowers and the guarantors have pledged certain equity interests in their respective subsidiaries and granted the lenders a security interest in substantially all of their domestic assets. All guarantors other than Quest Nutrition, LLC and Only What You Need, Inc. are holding companies with no assets other than their investments in their respective subsidiaries.
The Credit Agreement contains certain financial and other covenants that limit our ability to, among other things, incur and/or undertake asset sales and other dispositions, liens, indebtedness, certain acquisitions and investments, consolidations, mergers, reorganizations and other fundamental changes, payment of dividends and other distributions to equity and warrant holders, and prepayments of material subordinated debt, in each case, subject to customary exceptions materially consistent with credit facilities of such type and size. The Revolving Credit Facility has a maximum total net leverage ratio equal to or less than 6.00:1.00 contingent on credit extensions in excess of 30% of the total amount of commitments available under the Revolving Credit Facility. Any failure to comply with the restrictions of the credit facilities may result in an event of default. We were in compliance with all covenants as of February 28, 2026, and August 30, 2025, respectively.
As of February 28, 2026, the outstanding balance of the Term Facility was $400.0 million. We are not required to make principal payments on the Term Facility over the twelve months following the period ended February 28, 2026. The outstanding balance of the Term Facility is due upon its maturity in March 2030. As of February 28, 2026, there were no amounts drawn against the Revolving Credit Facility.
Stock Repurchase Program
The Company adopted a stock repurchase program in November 2018. On January 6, 2026, the Company announced that its Board of Directors approved a $200.0 million repurchase authorization under its stock repurchase program (the "Current Authorization"). Under the stock repurchase program, the Company may repurchase shares from time to time in the open market or in privately negotiated transactions. The stock repurchase program does not obligate the Company to acquire any specific number of shares or acquire shares over any specific period of time. The stock repurchase program may be suspended or discontinued at any time by the Company and does not have an expiration date.
During the thirteen weeks ended February 28, 2026, the Company repurchased 4,606,990 shares of common stock at an average price of $19.21 per share, inclusive of commissions and exclusive of accrued excise tax. During the twenty-six weeks ended February 28, 2026, the Company repurchased 9,590,504 shares of common stock at an average price of $19.62 per share, inclusive of commissions and exclusive of accrued excise tax. The U.S. Inflation Reduction Act of 2022 requires a 1% excise tax on the net amount of share repurchases. The Company did not repurchase any shares of common stock during the thirteen and twenty-six weeks ended March 1, 2025. As of February 28, 2026, approximately $182.5 million remained available under the Current Authorization.
Cash Flows
The following table sets forth the major sources and uses of cash for each of the periods set forth below (in thousands):
Twenty-Six Weeks Ended
February 28, 2026 March 1, 2025
Net cash provided by operating activities
$ 58,194 $ 63,267
Net cash used in investing activities
$ (7,633) $ -
Net cash used in financing activities
$ (41,804) $ (92,386)
Operating activities. Our net cash provided by operating activities decreased $5.1 million to $58.2 million for the twenty-six weeks ended February 28, 2026, compared to $63.3 million for the twenty-six weeks ended March 1, 2025. The decrease in cash provided by operating activities was primarily attributable to changes in working capital for the twenty-six weeks ended February 28, 2026, as compared to the twenty-six weeks ended March 1, 2025. Changes in working capital, comprised of changes in accounts receivable, net, inventories, prepaid expenses, other current assets, accounts payable, accrued interest, accrued expenses and other current liabilities, and other assets and liabilities, were driven by the timing of payments and receipts, which provided cash of $23.0 million in the twenty-six weeks ended February 28, 2026, compared to $41.6 million of cash used in the twenty-six weeks ended March 1, 2025, a difference of $18.5 million. Loss from operations was $175.7 million for the twenty-six weeks ended February 28, 2026, as compared to income from operations of $109.3 million for the twenty-six weeks ended March 1, 2025. The decrease was driven by higher operating expenses, primarily the loss on impairment. Additionally, cash paid for interest was $9.8 million in the twenty-six weeks ended February 28, 2026, which was a decrease of $3.7 million as compared to the $13.5 million paid for interest in the twenty-six weeks ended March 1, 2025.
Investing activities. Our net cash used in investing activities was $7.6 million for the twenty-six weeks ended February 28, 2026, compared to an immaterial amount for the twenty-six weeks ended March 1, 2025. Our net cash used in investing activities for the twenty-six weeks ended February 28, 2026, was primarily comprised of $7.6 million of purchases of property and equipment. The immaterial amount of net cash used in investing activities for the twenty-six weeks ended March 1, 2025, was primarily comprised of $0.8 million of purchases of property and equipment and $0.9 million of investments in intangible and other assets, and was offset by $1.7 million of cash proceeds received from escrow related to net working capital adjustments related to the OWYN Acquisition.
Financing activities. Our net cash used in financing activities was $41.8 million for the twenty-six weeks ended February 28, 2026, compared to $92.4 million for the twenty-six weeks ended March 1, 2025. Net cash used in financing activities for the twenty-six weeks ended February 28, 2026, primarily consisted of $188.2 million in repurchases of common stock, inclusive of commissions and exclusive of accrued excise tax, and $2.0 million in tax payments related to the issuance of restricted stock units and performance stock units, partially offset by $150.0 million in proceeds from issuance of long-term debt and $1.1 million of cash proceeds received from option exercises. Net cash used in financing activities for the twenty-six weeks ended March 1, 2025, primarily consisted of $100.0 million in principal payments on the Term Facility, and $2.5 million in tax payments related to issuance of restricted stock units and performance stock units, partially offset by $10.1 million of cash proceeds received from option exercises.
New Accounting Pronouncements
For a description of critical accounting policies that affect our significant judgments and estimates used in the preparation of our consolidated financial statements, refer to our Annual Report. Refer to Note 2, Summary of Significant Accounting Policies, of our unaudited interim consolidated financial statements in this Report for further information regarding recently issued accounting standards.
Simply Good Foods Company published this content on April 09, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on April 09, 2026 at 12:26 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]